Heath Insurance
Health insurance, like other forms of insurance, is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses. The collective is usually publicly owned or else is organized on a non-profit basis for the members of the pool, though in some countries health insurance pools may also be managed by for-profit companies. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided universally through government as a feature of social solidarity, as is typical in many industrial countries, or as form of government charity such as the United States Medicaid program. It may be purchased privately on a group basis (e.g., by a firm to cover its employees) or purchased by an individual for himself or his family. In each case, the covered groups or individuals pay a fee, premium, or tax, to help protect themselves from health care expenses.
“Health insurance is an insurance, which covers the financial loss arising out of poor health condition or due to permanent disability, which results in loss of income.” A health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium). It usually provides either direct payment or reimbursement for expenses associated with illness and injuries. The cost and range of protection provided by health insurance depends on the insurance provider and the policy purchased.
Health Insurance Policies and Main Features:
Types of Health Insurance Policies:
Health Insurance policies are broadly classified into types-Individual Health Insurance and Group Health Insurance. The following Health Insurance policies are available in India:
1. Individual Mediclaim Insurance
2. Group Mediclaim Insurance
3. Overseas Mediclaim Insurance
4. UHI
5. Health Plus Medical Expenses Policy
6. Group Health Plus Medical Expenses Policy
Major Characteristics of Individual Health Insurance Policy
Coverage: Individual coverage are generally classified into the following broad heads:
1. Hospital Surgical Insurance
2. Major Medical Insurance
3. Long-term Care Insurance
4. Disability Income Insurance
Hospital Surgical Insurance: It covers the following expenses:
· Hospital expenses: A typical Individual Health Insurance policy covers impatient hospital expenses subject to a specified limit and subject to certain amount of deductible or co-insurance
· Surgical expenses
· Cost of medicines and nursing
· Domiciliary expenses up to certain limits
Major characteristics of Medical Insurance :It covers major or broader coverage than basic coverage with the following characteristics:
1. Broad coverage for hospital charges, drugs, nursing, medical equipments, etc.
2. High maximum limit, say Rs. 5,00,000 or Rs. 10,0000, etc.
3. Benefit period: maximum amount paid under a major benefit policy depending on the length of the policy
4. Deductible that must be satisfied before the benefit is granted, which may be
yearly deductible, family deductible, etc.
5. Co-insura'lce is provided in most of the policies to avoid moral hazards
6. Taxation benefits subject to compliance of certain requirements
7. Pre-exiting conditions clause to avoid adverse selection
Common exclusions
1. Expenses caused by war or military conflict
2. Cosmetic surgery
3. Dental care except as a result of an accident
4. Eye and examination aids unless there is an accident
5. Pregnancy or childbirth unless specifically provided
6. Expenses covered under W.C. laws or similar laws
7. Services furnished by governmental agencies unless the patient has the obligation to pay
8. Experimental surgery
Standard Individual Mediclaim Insurance- Underwriting Guidelines
Coverage: This policy covers reimbursement of hospital is at ion or domiciliary hospitalization expenses for illness or diseases or injury sustained. In the event of any claim becoming admissible under this scheme, the insurer will pay to the insured person the amount of such expenses as would fall under different heads of medical expenses mentioned below and as are reasonable and necessarily incurred by or on behalf of such insured persons but not exceeding the sum insured in anyone period of insurance:
1. Room and boarding expenses provided by hospital or nursing home
2. Nursing expenses
3. Fees of surgeon, anesthetist, consultant etc.
4. Anesthesia, blood oxygen, OT, X-ray, surgical appliances, medicines etc.
The sum insured in this policy varies from ` 15,000 to 5,00,000 per person. This policy provides for family discount on total premium for the members of the family. In case of no claim, cumulative discount is also available as per the company's underwriting policy. In case of cost of health check, as per the policy conditions, generally once in four years is available.
Underwriting Guidelines: Individual Mediclaim Insurance has been showing very high incurred claim ratio since long. In the tariff market, this product has been sold by almost all underwriters with huge cross-subsidy from profitable products like fire and engineering. But in the de-tariff market, the prevalence of cross-subsidy is ruled out. Every product must stand on its own revenue. One product cannot subsidize other product. In view of our huge claim ratio of around 140 per cent of Individual Mediclaim Insurance, the underwriters have adopted the following underwriting measures to ensure prudent underwriting for this product today:
1. Fresh proposal for a single person above 45 years of age is discouraged.
2. Though mediclaim policy is available to persons between 5 years and 80 years of age, fresh acceptance of cover for a person beyond 60 years is discouraged, unless he is a member of a big family or group to be covered or otherwise potential.
3. Policy already in force for insured exceeding 75 years of age may be renewed on the basis of claim experience and risk evaluation with or without restrictive condition as per the risk analysis findings.
4. Cancellation of policy is done subject to the following underwriting policy:
a. Policy to be renewed by mutual consent.
b. Company is not bound to notify that policy is due for renewal.
c. Policy may be cancelled by company after giving 30-days notice and pro rata premium to be refunded, provided no claim has been paid under this policy.
d. Company remains liable for any claim arising prior to date of cancellation.
e. The insured may cancel the policy any time; the company would refund premium subject to 'No-claim' during the policy period.
5. Renewal of policy is done on the basis of the following norms:
a. In case renewal is agreed, the illness for which the expenses have been paid in previous policy are not to be excluded. Renewal is done on earlier terms.
b. If policy is renewed for enhanced sum insured, reimbursement of illness occurred in the previous policy shall be restricted to old sum insured.
6. Cost of health check up is allowed up to I per cent of average sum insured of four claims-free underwriting years.
7. Issuance of policies for period less than one year is prohibited.
8. Policies for persons above 75 years to be decided on the claim experience merit.
9. Extension for suspended mediclaim may be allowed only when overseas mediclaim policy has been taken by an individual or family as whole when one of the person goes abroad by taking overseas mediclaim policy.
10. Tax-benefit under Section 80D of the IT Act available when premium is paid by cheque.
11. General exclusions: provided under the policy:
a. All diseases or injuries which are pre-existing when the cover incepts for the first time.
b. Any diseases other than those mentioned below contracted by the insured person during the first thirty days from the commencement of the policy.
c. During the first year of the operation of insurance cover, the expenses on treatment of diseases such as cataract, benign prostatic hypertrophy, hysterectomy for menorrhagia or fibromyoma, hernia, hydrocele, congenital internal diseases, fistula in anus, piles, sinusitis and related disorders.
d. Injury or disease directly or indirectly caused by or arising from or attributable to war, invasion, act of foreign enemy, war-like operations (whether war be declared or not).
e. Circumcision unless necessary for treatment of a disease not excluded hereunder or as may be necessitated due to an accident, vaccination or inoculation or change of life or cosmetic or aesthetic treatment of any description, plastic surgery other than as may be necessitated due to an accident or as a part of any illness.
f. Cost of spectacles, contact lenses, hearing aids.
g. Any dental treatment or surgery which is a corrective, cosmetic or aesthetic procedure, including wear and tear, unless arising from disease injury and requires hospitalisation for treatment.
h. Convalescene, general debility, 'run-down' condition or rest corrective, congenital external disease defects or anomalies, sterility, venereal disease, intentional self-injury and use of intoxicating drugs or a1chol.
1. All expenses arising out of any condition directly or indirectly caused to or associated with human T cell lymph tropic virus type III (HTD-III) or lymphadinopathy-associated virus (LAV) or the mutants derivative or variations deficiency syndrome or any HTTB-III syndrome or condition of a similar kind commonly referred to as AIDs.
J. Charges incurred at hospital or nursing home primarily for diagnostic, X-ray or laboratory examinations not consistent with or incidental to the diagnosis and treatment of the positive existence or presence of any ailment, sickness or injury for which confinement is required at a hospital or nursing home.
k. Expenses on vitamins and tonics unless forming part of treatment for injury or disease as certified by the attending physician.
1. Injury or disease directly or indirectly caused by or contributed to by nuclear weapons or materials. '
m. Treatment arising from or traceable to pregnancy, childbirth, miscarriage, abortion or complications of this kind, including caesrian section.
n. Naturopathy treatment.
Guidelines for Group Medical Policy: The underwriters generally follow the underwriting procedures mentioned below to ensure prudent underwriting and high incurred claim ratio:
1. Group policy will be issued for named persons only.
2. Group shall be of any of seven specified categories, namely, (i) Employer-employee relationship, (ii) Pre-defined segment where premium is paid by Government, (iii) Members of a registered club, (iv) Members of a registered co-society, (v) Holders of credit cards of banks, visa or master cards (vi) Holders of deposit certificates of banks /NBFC, and (vii) Shareholders of a company.
3. Group discount generally varies from 2.5 per cent to 30 per cent available for various groups from 101 to 50,000 and above.
4. Monthly endorsement for any addition or deletion of any number of members shall be without any change in discount.
5. Group below 100 persons may be given group policy without discount.
6. Maternity benefit up to Rs. 50,000 available with 10 per cent loading on basic premium.
7. Cost of health check-up will not be available in group policy.
8. 5 per cent service charges on group policy.
Universal Health Insurance
This Health Insurance is a very important policy for people below the poverty line and is thus of great importance for social security and National Health Policy. Let us now discuss the important provisions of such Health Insurance as a matter of case study on underwriting of a Health Insurance product essential for National Health Policy.
Sum Insured:
1. Section I: Hospitalisation benefit per family-Rs. 30,000
2. Section II: Accidental death benefit for head of family-Rs. 25,000
3. Section III: Disability compensation on hosptalisation for head of family for maximum period of 15 days- Rs. 50 per day
Premium:
1. Individual person: Rs. 365 p.a.
2. Family of five persons (insured + spouse + 3 children): Rs. 548 p.a.
3. Family of seven persons (as above + parents): Rs. 730 p.a.
Benefits
Section I
1. Reimbursement of total medical expenses for anyone accident: Rs. 15,000
2. Reimbursement for a member of family-individually or collectively: Rs. 30,000, subject to following sub-limits of hospital expenses:
a. Room or boarding expenses: up to Rs. 150 per day
b. ICU reimbursement: up to Rs. 150 per day
c. Fees of surgeon, anaesthesist, consultant, etc.: up to Rs. 4,500 per illness
d. Anesthesia, blood, oxygen, QT, X-ray, surgical appliances, medicines, etc.: up to Rs. 4,500 per illness
The insurer's liability in respect of all claims admitted during period of insurance shall not exceed the SI ofRs. 30,000 per person or per family.
Section II
Death Compensation for earning head of the family solely and directly due to accident caused by outward, violent and visible means will be to SI, i.e. Rs. 25,000
Section III
Disable compensation for earning head the family solely and directly due to accident for which a valid claim under Section I is admitted will be up to Rs. 50 per day with excess of three days for a maximum period of 15 days.
General Exclusions:
1. All pre-existing diseases are not admissible.
2. Any disease other than those stated in the policy contracted by the insured person during the first 30 days of commencement of the policy, provided that in the opinion of panel doctors the insured could not have known the existence of the disease or any symptom and had not taken any consultation treatment or medication.
3. Some diseases like cataract, benign prostate hypertrophy, hysterectomy, hernia, menorrhagia or fibromyoma, hydrocele, congenital, internal disease, fistula, piles, sinusitis and related disorders are not payable.
4. Disease arising from or attributable to war or war-like operations.
5. Circumcision unless necessary for treatment or due to accident.
6. Cost of spectacles, contact lenses and hearing aids.
7. Dental treatment, which is cosmetic, corrective or aesthetic.
8. Convalescence general debility, 'run down' condition or rest cure, congenital external disease or defects or anomalies, sterility, venereal disease, intentional self-injury and use of drugs.
9. Any cosmetic treatment or surgery, sterility, venereal disease, HIV, AIDS 10.
10. Diagnostic, X-ray or laboratory examination not consistent with diagnosis
11. Vitamins and tonics not forming part of treatment.
12. Disease or injuries attributable to nuclear weapons.
13. Treatment arising from pregnancy, childbirth, miscarriage, etc.
14. Naturopathy treatment.
Specific Exclusion for Section II
1. Compensation in respect of death directly or indirectly contributed or traceable to any disability existing on the commencement of the policy.
2. Death arising directly or indirectly from:
a. Internal self-injury or suicide.
b. Pregnancy or any complication thereof.
c. Whilst engaging in aviation, ballooning, mounting or traveling in any aircraft other than as a passenger.
d. Whilst under the influence of intoxication, liquor or drugs.
e. Directly or indirectly caused by venereal diseases or insanity.
f. Breach of law with criminal intent.
General Conditions:
1. Only one policy will be issued to one family.
2. The pre- and post-hospitalization expenses are excluded.
3. Proposal form and prospectus to be signed by the proposer with all details.
Health Insurance Policies in India: The health insurance policies available in India are:
(a) Mediclaim policy (individuals and groups)
(b) Overseas mediclaim policy
(c) Raj Rajeshwari Mahila Kalyan Yojna
(d) Bhagyashree Child Welfare Policy
(e) Cancer Insurance Policy
(f) Jan Arogya Bima Policy
· Mediclaim policy (individuals and groups): Mediclaim policy is offered to individuals and groups exceeding 50 members. It covers the hospitalization for diseases or sickness and for injuries. Under group mediclaim policy, group discount is allowed to groups exceeding 101 people. The medical expenses will be reimbursed only if the insured is admitted in the hospital for a minimum duration of 24 hours. Cost of treatment includes consultation fee of doctors, cost of medicines and hospitalization charges. Health insurance in India is available at very economical rates. It is very popular among professionals like Chartered accountants, Advocates, Engineers etc. It is very suitable for self-employed persons because it covers risks against several general and serious diseases.
· Overseas Mediclaim Policy: In 1984, the Overseas Mediclaim Policy was developed. This policy will reimburse the medical expenses incurred by Indians upto 70 years of age while traveling abroad. The premium will be charged based on their age, purpose of travel, duration and plan selected by the insured under the policy. This policy is provided is provided to businessmen , people going on holiday tour, traveling for educational professional and official purposes.
· Raj Rajeshwari Mahila Kalyan Yojna: It is a personal accident policy offered by an insurance company for the welfare of women. It is offered to women residing in rural and urban areas. Women between 10-75 years of age are eligible for this policy irrespective of their occupation and income level.
· Bhagyashree Child Welfare Policy: It is offered to girls between 0-18 years. The age of the parents of the girls shouldn’t be more than 60 years. It provides coverage to one girl child in a family who loses her father or mother in an accident.
· Cancer insurance policy: It is designed for cancer patients aid association members. The persons insured under this policy will pay premium to their association along with the membership fee. This policy will offer coverage to the insured in case he develops cancer. All the expenses incurred for treatment of cancer not exceeding the sum insured will be paid directly to the insured person.
· Jan Arogya Bima Policy: This policy provides medical insurance to poorer section of the people. This policy covers illness like heart attack, jaundice, food poisoning, and accidents etc. that requires immediate hospitalization.
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